Investment Oversight and Manager Selection
Manager selection is where most family offices spend the most analytic time and produce the least differentiated outcomes.
Key takeaways
- —Manager DD scorecards prevent decision drift toward whoever pitched last.
- —Persistence of returns is empirically rarer than performance fees imply.
- —Side letters matter — anchor LP terms can shift the math materially.
- —Annual manager reviews should be at least as rigorous as initial selection.
Most large family offices select managers through some combination of pitch meetings, advisor recommendations, and conviction. The shared weakness is the absence of structural discipline: no scorecard, no documented criteria, no benchmark for what 'pass' versus 'pass for now' looks like. Decisions drift toward whichever manager pitched most recently or aligns with a senior decision-maker's existing relationships.
Working selection processes use scorecards. The scorecard names the criteria — fee structure, persistence evidence, gate provisions, anti-dilution, alignment terms, key-person risk, capacity discipline — and weights them. Each manager scores against the same template. Decisions are documented. The same template runs the annual review, so a manager who scores well at selection and degrades on year three is identified. The discipline takes time and produces no obvious wins; what it does produce is the ability to defend the portfolio under the difficult years.
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